1 Nasi Raissian, CPA Partner Ahmed Badawi, CPA Senior Manager Port of Redwood City Redwood City, California Presentation to the Board of Commissioners September 14, 2005

2 FINANCIAL STATEMENTS AND REPORTING RESPONSIBILITIES

3 These are the Port’s Financial Statements Adopt Sound Accounting Policies Provide Reasonable Accounting Estimates Establish and Maintain Internal Controls Prevent and Detect Fraud Provide Accurate and Complete Financial Reporting PORT’S RESPONSIBILITIES

4 Audit Report States: – The Port’s financial statements present fairly, in all material respects, the financial position and results of operations Audit Results: – No disagreements with the Port’s Management – No material weakness in Internal Controls – No audit adjustments C&L Issues Audit Reports and Recommendations to Management C&L RESPONSIBILITIES

5 C&L’s AUDIT PROCEDURES (IN SUMMARY)

6 Planned and Assessed the Port’s Accounting Principles Reviewed, Tested and Evaluated the Port’s Internal Controls Reviewed and Tested the Port’s Compliance with Federal Grants Validated the Port’s Significant Account Balances to Supporting Documents Received Direct Correspondence from Attorneys, Banks, Fiscal Agents and Others C&L’s AUDIT PROCEDURES (IN SUMMARY)

7 Reviewed and Evaluated Year-to-Year Comparisons of the Port’s Financials Prepared Financial Statements and Audit Reports Prepared Recommendations to Management C&L’s AUDIT PROCEDURES (IN SUMMARY)

AUDIT RESULTS

9 Audit Reports – Unqualified Opinions Financial Statements – Comparative Statements of Net Assets – Comparative Statements of Activities and Changes in Net Assets – Comparative Statements of Cash Flows – Notes to Financial Statements – Required Supplementary Information 2005 AUDIT RESULTS

AUDIT RESULTS

AUDIT RESULTS

AUDIT RESULTS

AUDIT RESULTS

14 RECOMMENDATIONS TO MANAGEMENT (In Summary)

15 Recommendation Current Status Current Recommendations: Adoption of a Fraud Policies In Progress and Procedures Prior Years Recommendations: Policies and Procedures In Progress Disaster Recovery Plan Implemented RECEOMMENDATIONS TO MANAGMENT

16 Prior Year: – Recognition of liability for the estimated costs of completion – Discontinuing capitalizing interest on the LBT clean-up project – Post closure costs not included – Treatment of settlements received from other responsible parties in the clean-up project – Assessment of the fair market value of the LBT LIQUID BULK TERMINAL (LBT)

17 Current Year: – Continued to recognize liability for the estimated costs of completion – Discontinued capitalizing interest on the LBT clean-up project – Post closure costs are still not included – All revenues from settlements will be netted against costs on a prospective basis LIQUID BULK TERMINAL (LBT)

18 Current Year: – Currently the Port is considering demolishing the tanks and renting the space as land – The tanks are no longer an issue – The amount that will be capitalized will be the amount of remediation related to soil and ground water clean up – The capitalized amount will not exceed the fair market value of the property at the time of completion of the project – The remainder of the costs associated with the clean up will be expensed as an extraordinary item LIQUID BULK TERMINAL (LBT)